The Czech Miracle: Impressive Numbers, Unhappy Idealists

Sebastian, Byron, Contemporary Review

A joke told by a waiter on Prague's Wenceslas Square: Have you heard about our Czech miracle? I make more money than my surgeon or my son's professor!

The most successful implementation of economic and political reforms in the post-communist states of central and eastern Europe has been in the Czech Republic. The new state, formed after the split of Czechoslovakia in 1992, currently stands heads above its neighbours in virtually all statistical measures of economic success and political stability. While current or former communists are returning to power elsewhere in the region, the Czech's ex-dissident President Vaclav Havel and Thatcherite Prime Minister Vaclav Klaus face no serious opposition from either the nationalist right or the communist left. Prague boasts three years of stable economic expansion, low unemployment, and swift privatisation; at the same time, the government's tight-fisted fiscal decisions have squashed inflation down to single-digit levels. In 1995 the Czech crown became fully convertible for the first time since World War II, and in November of that year the country joined the Organisation for Economic Co-operation and Development (OECD), an important stepping stone to the European Union. Mr. Klaus's advisors now tell journalists that theirs is a 'post-transitional' economy.

Nevertheless, while the happy statistics pour in and the Czech economy rolls forward, some sectors of the economy are being left behind. The state drastically underpays its doctors, researchers, professors and teachers: the average salary in these professions is roughly equal to the national average take-home pay of just under [pounds]200 per month. Those working in the lucrative tourist industry, particularly in Prague, often take home double or triple this amount.

As a result, many highly trained people are taking second jobs or abandoning their careers altogether. One economics professor asserted: 'In many university departments, most of the good, young faculty have left. Those remaining are older ones, waiting for their pension.' The effect on graduate students, who take home monthly less than [pounds]100, has yet to be felt, but one biologist reported that applications for positions in the department's graduate programme roughly equal vacancies, whereas 'ideally we'd like to have a six or seven-fold excess.'

Worse than the brain drain is the slipping of ethical standards. 'Everyone is cheating, and everyone knows it,' said Petr Sucharda of the Czech Medical Union. He explained that some doctors over-charge for business trips and that hospitals often charge for stays days after patients are discharged or die. By expecting doctors to live with ridiculously low wages, Sucharda argued, the government is multiplying its problems.

The Czech Miracle

To be sure, Mr. Klaus and his coalition government deserve credit for aggressively remaking their country into the image of a western liberal democracy. Pundits routinely single out the Czech Republic as the best example of a successful transition from an authoritarian, command economy to a capitalist liberal democracy. A visitor to Prague, particularly one returning after more than a few years, cannot help but be struck by how the capital city has thrived. Virtually each city block in the centre sports ambitious reconstruction projects, a hard-working population, and well-known international names (ranging from Benneton and McDonald's to Credit Lyonais and Anderson Consulting). One Vienna-based western diplomat recently predicted that Prague would succeed Austria's capital as the focal point of central Europe.

The litany of statistics is impressive: unemployment firmly below 5 per cent, inflation under 10 per cent for two consecutive years, double digit growth in the industrial sector, and a 1995 budget surplus of more than two hundred million pounds. Such numbers put to shame not only much larger Poland and previous favourite Hungary (both now in the hands of ex-communists) but many 'developed' western nations as well. …

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